NPS-conscious LG Elec to nearly double dividend payout this year

South Korea’s LG Electronics Inc. sharply upped cash dividends and made changes to its corporate mandates in apparent move to indulge its second largest shareholder National Pension Service (NPS) after the fund became more vocal on shareholders’ rights.

It would pay out 750 won ($0.66) per common share and 800 won per preferred share this year, up 87 percent and 77 percent from last year’s 400 won and 450 won, respectively.

The agendas were passed at the annual shareholders’ meeting on Friday in Seoul. The company increased its dividend payout for the first time since 2015, conscious of the NPS which under stewardship code publishes names of companies with overly stingy or stagnant dividends for a lengthy period.

The pension fund with 635 trillion won in assets under management arranged a three-stage process to correct stingy firms early this year. It holds a private meeting with a firm paying small dividends at the first year, and puts it on its watch-out list if it does not increase dividends in the following year. It the company fails to up the payout for three years in a row, it is blacklisted by the fund.

LG Electronics last year received one veto from NPS on its proposal to increase compensation for executives. The fund is the electronics maker’s second largest shareholder with a 9.4 percent stake.

The NPS is expected to raise its voice and pressure until dividends by the Korean Inc. improve to the global average of 40 percent from current 20 percent level.